Step-by-Step Guide to Buying Bitcoins

The biggest distinction in sourcing Bitcoin is whether to purchase from a private business or from another individual. There are many different exchanges online that hold Bitcoin available for sale. Bitcoin is almost always the primary coin available.

Step 1: Is this the right time to buy Bitcoin?

Take a look at the market. Getting into cryptocurrencies has exposed many individuals to bits of economic education that they might not have ever learned otherwise.

The value of Bitcoin fluctuates in market cycles that are fairly similar to how existing stock exchanges move, but with a bit more volatility. For the long-term investor that looks to put the Bitcoins aside for years, this might not be the primary concern.

However, 20% swings in value are common within just a few days or a week for Bitcoin. It is definitely worth looking into the charts a bit before a purchase.

Historically, the end of December and early January, as well as early June see highpoints for Bitcoin’s value. Of course, the overall trend is consistently upward, so this should definitely not be taken as a rule or as financial advice.

Step 2: What payment method is preferred?

It’s possible to find someone willing to trade Bitcoin for just about anything. The method you prefer will affect whether or not the seller chargers above the going market rate or not. Register for a website like Coinbase, LocalBitcoins or Coinstamp and get ready to invest.

When purchasing Bitcoin from a private source, bank transfers are most commonly accepted, but some websites do accept purchases with a credit card. This has been a controversial topic lately because some banks have begun to charge “Cash Advance” fees for Bitcoin purchases. Yet this is happening in the same places where governments consider Bitcoin as an asset, rather than a currency.

The most widely used Peer-to-Peer Bitcoin exchange is www.LocalBitcoins.com. Here you can find someone to take just about any form of payment, from physical cash by meeting the seller in person, to mailing an Amazon Gift card. The disadvantage here is that sellers price their Bitcoin above the market value. For less secure payment forms like Money Gram or an Amazon Gift card, the seller might charge 20% or more than the current market price for Bitcoin.

Step 3: Where will the coins be stored?

After purchasing Bitcoin, pick a wallet that fits your needs. If you’re holding onto them as a long-term investment, research Cold Wallets. If you are considering trading them for Altcoins, look into a Software Wallet. If you plan on using them as a payment method, look into a Mobile Wallet.

Any website used to purchase Bitcoin will provide a wallet to hold them. Setting this wallet up will be part of the registration process for the service.

Depending on the website, there are varying levels of identification needed to establish the account. Some require a picture of the user holding their government ID card and debit card.

Others require very little identification or none at all.

If you want to purchase by meeting an individual in person, you will have to establish a wallet before you buy Bitcoin from them so that they can send it to you. But it is important to create your own wallet regardless of where you purchase. One of the major benefits of cryptocurrencies is that they put the owner in full control of their wealth.

If you leave your Bitcoin on a centralized exchange website, you are defeating that purpose.

There are many forms of wallets, with the biggest distinction being whether the wallet is connected to the Internet or not. If connected, they are called Hot Wallets. The most common web wallet is Blockchain.info. The most common software wallet is Electrum. A good example of a mobile wallet is Jaxx, which is also available as a software wallet

Although it is uncommon for cryptocurrency wallets to be hacked, by removing coins from connection to the internet, it removes all possible risk. These are called Cold wallets and can be hardware or paper.

These are basically encrypted flash drives that hold the data in your wallet. A Paper wallet contains a secret code that can be used to regenerate all the data in your wallet. This can take the form of a string of 12 randomized and unique words, or a QR code.

Step 4: Take control of your coins

Establish the wallet that will be most effective for your uses. This wallet with have a public key. When a wallet can store multiple coins, there will be a specific key to each coin. Make sure you find the coins specific to Bitcoin.

Open the wallet where the coins were purchases and locate the withdrawal option. This will prompt you for a public key destination address and let you set the amount of Bitcoin you want to move in the transaction.

Many platforms will also send you an email to confirm that you initiated the transaction – it will not begin until you click the confirmation link in the email.

Once the transaction is confirmed and active, it will provide a transaction ID. This code can be used to track the progress of the transaction on the Bitcoin network at https://blockchain.info/

Step 5: How involved do you want to be?

The most beneficial way to purchase Bitcoin is to become involved in a local Bitcoin community. Most cities have formed small groups of people who support Blockchain technology and cryptocurrencies. It’s not uncommon for someone in these communities to offer Bitcoin to newcomers without up charging them the market price.

They will also help you establish a secure wallet and probably have answers to anything you are unsure about.

There are several projects that are working to ease cryptocurrencies in our daily lives by providing some of the same services that a bank does, or by replacing a service like Venmo or Paypal. The cryptocurrency space is just scratching the surface of the potential of Blockchain technology.

It can be exciting just to keep up with the new developments even if you aren’t invested.